WORLD TRADE  
ORGANIZATION  G/SCM/N/146/KNA 
13 July 2006 
 (06-3392) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
Updating Notification  
 
ST. KITTS AND NEVIS 
 
  The following communication, dated 11 July 2006, is being circulated at the request of the Delegation of St. Kitts and Nevis.  
_______________ 
 
 1. Title of the programme for which extension is requested pursuant to procedures in G/SCM/39
 
  The Fiscal Incentives Act No. 17 of 1974. An  Act to provide incentives to industry. 
 
2. Period covered by the notification
 
  The programme description is as of 30 June  2004 and is identical to that as of 
1 September 2001.  
3. Policy objective and/or purpose of the study
 
  The objective of this programme is to s timulate export performance, support investment, 
promote economic activity, and promote diversifica tion in traditional and non-traditional products. 
 
4. Background and authority for the subsidy
 
 
 Background 
 
 The Government of St. Kitts and Nevis consid ers that appropriate conditions for encouraging 
foreign direct investment are to be promoted in  order to ensure the economy remains in a viable 
position.  
 Authority 
 
 Fiscal Incentives Act, St. Kitts-Nevis-Anguilla, No. 17 of 1974 
 G/SCM/N/146/KNA 
Page 2  
 
  5. Form of the subsidy
 
  The subsidy takes the form of a tax exemption.  6. To whom and how the subsidy is provided (w hether to producers, exporters or others), 
through what mechanisms, whether it is a fixed sum or fluctuating amount per unit and, if the 
latter, how the amount is determined  
  The main beneficiaries of the fiscal incen tives scheme are manufacturing and agro-processing 
enterprises.  This incentive scheme is managed by the Ministry of Industry and Commerce. 
Applicants for incentive benefits under this schem e are submitted to the aforementioned Ministry, 
which recommends to Cabinet the level a nd type of concessions to be granted. 
  The Fiscal Incentives Act allows for the granting of  a tax holiday of up to fifteen (15) years, 
for the manufacture of approved products by approved enterprises.  The duration of these concessions 
is in accordance with the local value added genera ted.  In this respect, the Act classifies these 
approved enterprises as follows:  
• Group I enterprises, where the local value added is 50% or more of sales, may enjoy a tax 
holiday of up to 15 years; 
 
• Group II enterprises, where local value added is  between 25% and 50% of sales, may enjoy a 
tax holiday of up to 12 years; 
 
• Group III enterprises, where local value added is  between 10% and 24% of sales, may enjoy a 
tax holiday of up to 10 years; 
 
• Enclave enterprises, where production is exclusiv ely for export, may enjoy a tax holiday of up 
to 15 years. 
 
 Where an approved enterprise is engaged in a highly capital intensive industry it may receive 
some benefit for a period of up to 15 years.   The Act also grants import duty exemptions for machinery, equipment and spare parts, 
building materials, raw materials and others, as a ppropriate to be used in eligible enterprises. 
 
 The Fiscal Incentives Act No. 17 of 1974 further provides for income tax relief under certain circumstances once the tax holid ay period has expired.  The relief is contingent on export 
performance.  It is granted on the export profits  of an enterprise accruing from the export of its 
approved product.  Relief is provi ded for non-traditional exports to all countries; however, in the case 
of exports to Guyana, Jamaica and Trinidad and T obago, the period of relief is of only five years 
immediately following the expiration of the tax holiday period. 
  (Schedule II part two of the Act attached  explains the method of calculating export 
allowance)   G/SCM/N/146/KNA 
 Page 3 
 
 
  7. Subsidy per unit, or in cases where this is  not possible, the total amount or the annual 
budgeted amount for this subsidy (indicating, if possible, the average subsidy per unit in the 
previous year). Where provision per unit subsid y information (for the year covered by the 
notification, for the previous year or both) is not possible a full explanation should be 
provided  
 
 Given the nature and coverage of the programme there are no statistics available which reflect 
the amount of subsidy per unit.  Further, there is  no provision in our annual budget to determine the 
amount of funds allocated to this form of benefit provided for approved enterprises because the nature 
of approved assistance is revenue foregone. 
 
8. Duration of the subsidy  
  The duration of the subsidy is subject to St. K itts and Nevis’ rights a nd obligations under the 
WTO Agreements and in particular, the SCM Agreement. 
 
9. Statistics on the impact of the programme
 
  The following table illustrates the total value of  St. Kitts and Nevis’ foreign trade with world 
partners on all commodities during the period 2002-2004.  
Year Imports ($EC) Exports ($EC) Re-Exports 
    
2002 544.6 million 94.8 10.6 
2003 553.5 million 122.6 9.5 
2004 (to be provided) (to be provided) (to be provided) 
 G/SCM/N/146/KNA 
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  ATTACHMENT I
 
  
SCHEDULE I
 
 
MEMBER STATES  
  
(a) Antigua      Jamaica 
  B a r b a d o s      M o n t s e r r a t  
  Belize      St. Kitts/Nevis/Anguilla 
  D o m i n i c a      S t .  L u c i a    Grenada     St. Vincent   Guyana      Trinidad and Tobago  
 (b) any other state of the Caribbean regi on that becomes a member of the Common 
Market. 
 
 
SCHEDULE II
 
 
PART I  
 
EXPORTS TO THE FOLLOWING TERRITORIES ARE  
NOT ELIGIBLE FOR EXPORT ALLOWANCE  
 
(c) Antigua      Jamaica 
  B a r b a d o s      M o n t s e r r a t    B e l i z e       S t .  L u c i a    D o m i n i c a      S t .  V i n c e n t   
 
PART 2
 
 
METHOD OF CALCULATING EXPORT ALLOWANCE 
1. An export allowance set off for the purposes of section 16 shall be calculated as follows: 
 
 Export profits as a percentage     Rebate of income tax as a  
 of total profits       percentage of income tax on  
   export profits  
  10 but under 21       25%  21 but under 41       35% 
 41 but under 61       45% 
 61 and over        50%  2. for the purposes of calculation -   
 (a) “export profits as a percentage of total pr ofits” shall be deemed to be “export sales as 
a percentage of total sales”. 
  G/SCM/N/146/KNA 
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   (b) profits attributable to e xports shall be taken to be the amount resulting from the formula 
P x E   where -  
               S    (i) “P” represents the chargeable prof it of a company for its year of income 
  (ii) “E” represents the proceeds of sal es (ex-factory) of the output of a company 
exported during its year of income; 
  (iii) “S” represents the proceeds of sales (ex-factory) of the total output of the 
company during its year of income. 
 
3. In computing the proceeds of all sales for th e year of income there shall be deducted any 
excise duty paid on goods sold during that year. 
  
SCHEDULE III
 
TAX HOLIDAY PERIODS  
  Classification of 
 
 Approved Enterprise       T a x  H o l i d a y  P e r i o d  
 Group         Y e a r s  
 
 Group I Enterprise       15 
 Group II Enterprise       12  Group III Enterprise       10  Enclave Enterprise       15  
W.F. Glasford 
Speaker 
 
Passed in the House of Assembly this 17
th day of April, 1974 
  
 
E.JAMES FLEMING 
Ag. Clerk of the House of Assembly. 
  
 
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